Baird Cuts AT&T (T), Verizon (VZ) to Neutral Amid Several Worries

Baird's William Power downgraded shares of AT&T (NYSE: T) and Verizon (NYSE: VZ) from Outperform to Neutral in an early-morning research note Thursday. The analyst cited a slowdown in sales growth, ever-increasing data traffic, and continued needs for fresh spectrum.

Power pointed to free cash flow for the US's major carriers which has barely grown since 2007, all while Apple's (Nasdaq: AAPL) free cash flow has surged from about $6 billion to now over $40 billion.

Elsewhere, the Baird analyst noted MetroPCS (NYSE: PCS) is generating solid cash, however has ongoing spectrum needs. Sprint (NYSE: S) and Leap (Nasdaq: LEAP), on the other hand, are rapidly burning through cash in addition to a high level of debt. The analyst believes these factors will likely limit the companies long-term access to capital.

AT&T shares are down 0.6 percent to $31.18 at last check; shares of Verizon are down 0.4 percent to $38.09.

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